Iams is in the business of manufacturing and selling pet foods. For many years, Watkins was a…

Iams is in the business of manufacturing and selling pet foods. For many years, Watkins was a nonexclusive distributor of Iams products in Michigan. In 1986 or 1987, Iams began to require Watkins (as well as its other distributors) to sign yearly written distributorship agreements. Until 1987, Watkins was the sole distributor of Iams products in Michigan, but in 1986, Wolverton, Inc., also began selling Iams products in the state. In 1989, Iams began offering its distributors a 2 percent discount on its products in return for a commitment from the distributors to sell Iams products exclusively. The discount was significant, given the low profit margins customary in the business. Watkins alleges that in 1990, Iams promised it that if it became an exclusive Iams distributor, Iams would grant it an exclusive sales territory in Michigan when Iams changed to a distribution system of exclusive territories. Watkins claims that it became an exclusive distributor in reliance on this promise. It entered into an exclusivity agreement in July 1990 and annually thereafter through 1993. The contract of January 31, 1993, between Iams and Watkins contains the following provisions: Notwithstanding the appointment herein the Company [Iams] reserves the right for itself to sell Products within the Territory. In addition, the Company may appoint any other distributor to sell Products within the Territory. This Agreement shall be effective on February 1, 1993, and shall automatically expire, without any further action by either party required, on January 31, 1994, unless earlier terminated as set forth in Section 4.2 or 4.3 or otherwise in accordance with the provisions of this Agreement. This Agreement may be renewed thereafter on terms mutually agreeable to the parties only in a writing signed by the parties hereto . . . With the exception of Schedule I, which may be unilaterally amended by the Company as provided in this Agreement… and except as otherwise provided in this Agreement, no change, modification or amendment of any provision of this Agreement will be binding unless made in writing and signed by the parties hereto. THIS AGREEMENT TOGETHER WITH THE COMPANY’S STANDARD TERMS AND CONDITIONS OF SALE REPRESENT THE ENTIRE AGREEMENT BETWEEN THE PARTIES AND SUPERSEDES ALL PRIOR, EXISTING, AND CONTEMPORANEOUS AGREEMENTS, WHETHER WRITTEN OR ORAL . . . Instead of making Watkins its exclusive dealer, Iams notified Watkins in September 1993, that it would not renew its distributorship contract, and the contract expired, in accordance with its terms, on January 31, 1994. Iams subsequently entered into an exclusive distribution contract in Michigan with Wolverton.

Watkins brought suit against Iams on a number of grounds, including breach of contract, fraud, and promissory estoppel. Will Watkins win?



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